Topic 5 Key Terms Flashcards
Administration order
A repayment plan arranged by county courts in England, Wales and Northern Ireland for people with less than £5,000 in unsecured debt and at least one county court judgment (CCJ) against them. They apply to the court to have an administration order issued, then pay what the court decides they can afford directly to the court each month, and the court makes repayments to their creditors.
Arrears
An unpaid overdue debt.
Bankruptcy
A situation in which a person cannot pay their debts and is the subject of a court order that shares out their assets between their creditors.
Consolidation loan
A loan used to pay off a number of different debts, meaning that there is then only one payment to make each month, to the loan company.
County court judgment (CCJ)
In England and Wales, a judgment issued by a county court to a person who does not respond to court action from a person or organisation to which they owe money. The CCJ affirms that the money is owed.
Credit card
A card that allows the holder to make purchases face to face, online or over the phone, and to withdraw cash from an ATM. Unlike a debit card, where the money is taken from the holder’s own account, transactions are paid by the card provider. The cardholder repays the amount owed to the provider either in one payment or in instalments. The provider charges interest on cash withdrawals from the time the withdrawal is made and on purchases after a certain period.
Credit crunch
A reduction in the availability of loans or a tightening of the conditions needed to obtain one. The global financial crisis of 2007–08 began when financial institutions became reluctant to lend funds to one another.
Creditor
A person or an organisation to which a debtor owes money.
Credit reference agency
An independent organisation that maintains records of people’s credit history – that is, what they have applied to borrow, what they have actually borrowed and whether they have paid it back. The data is provided by lenders.
Culture
A society’s set of norms about behaviour and attitudes across social groups.
It indicates what society considers to be acceptable and unacceptable.
Debtor
A person who owes money.
Debt management plan (DMP)
A detailed plan drawn up by a debt management company (DMC) and sent to an individual’s creditors. It sets out an affordable monthly payment shared between the creditors.
Debt relief order (DRO)
An order a person in specific circumstances can apply for if they cannot afford to pay off their debts. It generally lasts one year, during which time none of the people owed money can take action, and after which the listed debts are cleared. Granted by the Insolvency Service, a DRO works out cheaper than going bankrupt.
Default
To fail to repay borrowing when the repayment is due.
Deficit
Where expenditure exceeds income.
